Published on March 31, 2020
The contract provisions—known as binding arbitration clauses—will only grow in importance, as consumers and employees look for ways to hold large corporations accountable if and when they break either existing or new commitments that have been promoted as providing relief in the time of Covid-19.
The rise of these hidden contract clauses in which hundreds of millions of contracts block individuals from taking action in state and federal courts, has been viewed by some legal experts as the leading legal trend of the past decade.
But despite an estimate of over 80 million eligible claims, only around 10,000 cases were resolved via the private court system through which these claims are instead routed.
This and other findings come from an analysis by the consumer rights service FairShake, based on data disclosures by arbitration providers the American Arbitration Association (AAA) and JAMS.
Corporations have embraced binding arbitration clauses since the clauses allow them to prohibit class action lawsuits, and force those with complaints to bring claims individually instead.
Compare this year’s 10,000 arbitration claims against the old consumer class action system, which saw 25 million consumer claims per year against the financial services industry alone in the years following the 2008 financial crisis.
In 2019, no company saw more arbitrations initiated than rideshare provider Uber. Thanks to action coordinated by over 12,000 dissatisfied drivers, more claims were initiated against Uber in the past year than were resolved by all companies in the AAA and JAMS arbitration systems combined. (While the Uber driver saga began in 2018, the bulk of initiated claims are reflected in JAMS’ 2019 data.)
Although Uber is taking the spotlight due to the sheer number of arbitration cases against them, another popular industry has also tried to push lawsuits into the arbitration space. Dating apps have been in the legal hot-seat for a while over the kinds of user data they share with 3rd party advertisers. Over the past 5 years, 69 claims against dating services were resolved through arbitration. Most of these cases involved the dating app Tinder.
When claims are filed for arbitration, data suggests that companies start to take them seriously. On the consumer side, 57% of claims were resolved through a private settlement that induced the customer to drop the claim.Among the largest public awards (which excludes the private settlements), the largest individual consumer awards involved pest control companies. The largest employment awards, meanwhile, included well-known names Halliburton, Duke University, Citigroup, Live Nation, and Cracker Barrel.
Unfortunately, the names of individuals who brought these cases, and documents relating to the issues involved, are not made publicly available.
FairShake (formerly Radvocate) is the online service giving American consumers the power and leverage to stand up to big companies. FairShake’s online platform and expert team transform the bureaucratic nightmare of a consumer arbitration claim into a simple, supportive online experience. We’ve already helped thousands of Americans achieve fair resolutions in their disputes.
FairShake has been covered by outlets including VentureBeat, CNET, and TechCrunch, and was selected for the American Bar Association’s list of Best Web Tools.
For more information please contact:
Max Kornblith, Co-Founder & Head of Growth
press [at] fairshake.com
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